NOTE 8 – EQUITY INVESTMENT – SAWGRASS APR HOLDINGS LLC

At the close of business December 31, 2024, Duos Energy Corporation, a subsidiary, executed the AMA with New APR to manage its operations. The Company’s former CEO is currently a Director of the Company and also was CEO of New APR.

The Company was issued a 5% non-voting ownership interest in Sawgrass Parent, in the form of 25,882,353 common units, which has been accounted for using the equity method. The Company determined the equity method was appropriate since Sawgrass Parent is considered a related party due to common management and the Company can exert significant influence over the operations of New APR. The Company concluded that the arrangement with New APR is within the scope of ASC 606, Revenue from contracts with customers, and the common units issued to the Company by Sawgrass Parent represented non-cash consideration under ASC 606-10-32-31. The initial carrying value as of December 31, 2024 of $7.2 million was measured equal to the fair value of the common units received for future services to be performed under the AMA which was being recognized over a period of two years, the initial contractual term of the AMA. The Company recorded $7.2 million of an equity method investment asset and $7.2 million of contract liabilities for services to be performed under the AMA. Following the sale of substantially all of New APR's assets and the resulting change in facts and circumstances, the Company reassessed the remaining contract liability under ASC 606-10-32-31. As the remaining obligations and uncertainties associated with the arrangement were effectively resolved, recognition of the remaining deferred balance in the period of the sale was appropriate.

Sale of New APR Assets

As previously disclosed, the Company owned a 5% non-voting ownership interest in Sawgrass Parent, the ultimate parent company of New APR. As of May 26, 2026, substantially all of the assets of New APR were sold to a third party. As a result of the sale, in connection with its ownership interest, the Company received net proceeds of approximately $53.1 million. An additional amount of approximately $10.0 million was withheld in connection with the Company's pro rata portion of any indemnity and other similar obligations that may be owed to the purchaser under the asset purchase agreement, and is recorded as a holdback receivable – related parties on the accompanying consolidated balance sheet. Any funds remaining at the end of the 12-month holdback period will be distributed to the Company.

As a result of this transaction, the Company derecognized its equity method investment carrying value of $7,233,000 and recognized a gain on the disposition of its equity method investment of approximately $50.4 million during the three and six months ended June 30, 2026, calculated as follows:

The $10.0 million holdback receivable is included in the gain on sale of investments recognized during the three months ended June 30, 2026, and its ultimate realization is subject to the resolution of potential indemnity and other obligations under the asset purchase agreement. Any amounts remaining at the end of the 12-month holdback period will be distributed to the Company.

The AMA was amended after one year, with residual billings under the arrangement occurring in the first and second quarter of 2026. During the six months ended June 30, 2026, the Company recognized $3,616,500 of contract liabilities as revenue, including the accelerated recognition of the remaining deferred revenue balance following the sale of substantially all of New APR’s assets, and no contract liability associated with the AMA remained at June 30, 2026.